SINGAPORE, 5 January 2016 – Southeast Asia emerges as a major economic force and a driver of global growth accelerating the region’s potential for corporate real estate, according a new report from CoreNet Global, the global association for corporate real estate (CRE) and workplace professionals, service providers and economic developers.
With the establishment of ASEAN Economic Community (AEC), a single market and production base eliminates trade barriers and allows free flow of goods, services, labor and capital making the bloc an attractive destination for investments and expanding businesses. This bolsters growth opportunities for corporate real estate with more interest from small and medium-sized enterprises and multinational corporations.
With a combined gross domestic product (GDP) of US$2.5 trillion in 2014, ASEAN now has the third-largest GDP in Asia, after China and Japan; making it the seventh-largest economy globally. If this growth trend continues, experts estimate ASEAN to become the world's fourth-largest single market by 2030, after the European Union, the United States and China with an overall GDP forecast to reach US$10 trillion by 2030.
This opportunistic landscape for ASEAN has sparked interest among foreign investors that are seeking to capitalize on the lower trade barriers and higher trade flows that give them access to other larger markets. Surpassing China, the region attracted a total of $111.8 billion in foreign direct investment (FDI) in 2014 from countries outside of the region. Singapore attracted the lion’s share of that FDI at $67.6 billion, followed by Thailand at $10.9 billion; Indonesia at $8.8 billion; Malaysia at $7.9 billion; and Vietnam at $7.7 billion, according to ASEAN statistics.
One of the key drivers in this growth is the low-cost labor in Cambodia, Indonesia, Laos, Myanmar, and Vietnam and the large consumer market that makes ASEAN attractive for both domestic and international manufacturers. Within ASEAN, Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand are considered as notable targets for companies to set up operations and meet their business needs.
Singapore, being the most advanced ASEAN economy, serves as the gateway to the region with many corporates setting up their regional headquarters there to expand their network of R&D, manufacturing, logistics and back office support throughout the broader region. According to the World Bank’s ranking, Singapore continues to hold on to its decade-long position of being the most business-friendly destination in the region.
As ASEAN continues to evolve and present itself as a lucrative destination, the development divide between the region’s advanced and developing economies presents itself as a challenge for businesses. Advanced nations like Singapore and Malaysia provide a more conducive, business-friendly environment in comparison to the region’s developing countries, which sometimes lack skilled labor and pro-investment policies.
“While there remains some nationalist protectionism, the AEC template and guidelines are there to ensure that the whole of ASEAN moves forward as a stronger economic region,” says Desmond Sim, head of Southeast Asia Research for CBRE, who was interviewed for the CoreNet Global report.
About CoreNet Global
CoreNet Global is the world’s leading professional association for corporate real estate (CRE) executives with strategic responsibility for the real property used by multinational corporations for their own operations. CoreNet Global’s more than 9,500 members, who include 70% of the top 100 U.S. companies and nearly half of the Global 2000, meet locally, globally and virtually to develop networks, share knowledge, learn and thrive professionally. For more information, please visit www.corenetglobal.org.
Eastwest Public Relations